The United States Circuit Court of Appeals for the District of Columbia on Tuesday, July 28, 2015 upheld the majority of the Environmental Protection Agency’s (EPA) Cross-State Air Pollution Rule (CSAPR) regulating air pollution that travels between states. The court’s opinion in opinion in EME Homer City Generation, L.P. v. EPA rejected legal challenges to CSAPR’s program requiring states to limit their emissions of certain air pollutants based on the amounts of these pollutants that travel to neighboring states, while requiring EPA to reconsider certain of the state-specific emissions budgets it had calculated under the rule.

The Clean Air Act (CAA) requires each state to prepare an emission-control implementation plan that allows the state to meet federally determined limits on the amount of certain pollutants in ambient air. CSAPR was promulgated pursuant to the CAA’s “good neighbor” provision, under which states must also set limitations on emissions that contribute significantly to the inability of downwind states to meet ambient air requirements. (The good neighbor provision addresses the problem of prevailing continental winds carrying pollution generated in “upwind” central and Midwestern states to “downwind” eastern and coastal states) CSAPR identified 27 upwind states that contributed significantly to levels of specified pollutants in downwind states, and imposed uniform cost-based emission reduction requirements on the upwind states.

The court broadly rejected the state and industry challengers’ arguments that EPA employed improper methodology in determining which upwind states fell within the rule’s purview, but required EPA to re-calculate certain emissions budgets to the extent its uniform approach would leave the upwind states to reduce emissions below what is necessary for the downwind states to meet the ambient air requirements. The ruling, along with the Supreme Court’s ruling in June on the EPA’s Mercury and Air Toxics rule, is another minor pause in EPA’s continued efforts to strengthen the CAA’s protection of air quality, but does not represent a significant change in how states and regulated entities will be required to limit emissions going forward.